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Severn Trent receives takeover approach Severn Trent receives takeover approach
(about 1 hour later)
A group of international investors is interested in buying UK water supplier Severn Trent, the company has said. UK water supplier Severn Trent has said that a group of international investors is interested in buying the company.
The investors include a Canadian infrastructure company and the Kuwaiti government investment fund.The investors include a Canadian infrastructure company and the Kuwaiti government investment fund.
Severn Trent confirmed it had received an approach, but said it was "at a very early stage" and there was no certainty that an offer would be made. Severn Trent supplies water to about 7.7 million people in Wales and the Midlands.
The company's shares jumped more than 17% in the first few minutes of trading on the London Stock Exchange. The firm said the bid approach was "at a very early stage" and there was no certainty that an offer would be made. Its shares jumped 15% on the news.
Severn Trent was formed following the privatisation of UK water authorities in 1989. It now supplies water to about 7.7 million people.
The consortium of potential bidders consists of Canada's Borealis Infrastructure, the Kuwait Investment Office, and Universities Superannuation Scheme - a UK pension fund.The consortium of potential bidders consists of Canada's Borealis Infrastructure, the Kuwait Investment Office, and Universities Superannuation Scheme - a UK pension fund.
The Kuwait Investment Office is the UK branch of the Kuwait Investment Authority, which manages funds on behalf of the Kuwaiti state.The Kuwait Investment Office is the UK branch of the Kuwait Investment Authority, which manages funds on behalf of the Kuwaiti state.
Severn Trent said the consortium had not made a takeover proposal yet. "There can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming," it said.Severn Trent said the consortium had not made a takeover proposal yet. "There can be no certainty that an offer will be made or as to the terms of any such offer, should one be forthcoming," it said.
June deadline
A report carried by the Dow Jones-owned newspaper Financial News suggested a bid could be worth £5.3bn ($8.1bn).A report carried by the Dow Jones-owned newspaper Financial News suggested a bid could be worth £5.3bn ($8.1bn).
The surge in the share price following confirmation of the approach values Severn Trent slightly below that at £5.1bn.
UK takeover rules mean the consortium must now decide whether or not to submit a formal bid for Severn Trent by 11 June.
Severn Trent was formed following the privatisation of UK water authorities in 1989.
UK utility companies have proved to be popular investments for international investment firms looking for steady returns.
In 2006, Thames Water was bought by a consortium led by Australian investment group Macquarie and a Chinese sovereign wealth fund.
Yorkshire Water was bought in 2007 by a consortium including Citigroup and HSBC, along with Singapore sovereign wealth fund GIC.
Canada's Borealis already owns stakes in UK utility and infrastructure companies, including Associated British Ports and gas provider Scotia Gas Networks.